Acadia Pharmaceuticals Inc.'s announcement that it will not have to run a second late-stage trial of its drug pimavanserin represents a "major positive" for the stock, according to a Jefferies analyst who raised his price target on the shares.
Thomas Wei said in a Friday morning research note the development will speed approval for pimavanserin, a potential treatment for psychosis associated with Parkinson's disease.
The analyst now expects the drug to launch in the third quarter of 2015 instead of his previous projection for 2016. He raised his price target on the shares to $18 from $13.
Acadia, which is based in San Diego, said Thursday that the Food and Drug Administration agreed that results from previous clinical trials and other clinical data are enough to support a filing for marketing approval. As a result, the company said it is canceling a second late-stage study of the drug.
Acadia does not have any approved products and pimavanserin is its most advanced experimental drug.
The company has said that up to 60 percent of Americans with Parkinson's disease develop psychosis, and there is no approved therapy to treat the condition. The company said anti-psychotic drugs are sometimes used, but those drugs can increase the risk of death and cause side effects like further loss of motor control.
Wei said the FDA's decision speaks to the unmet need that the drug targets, and this need will weigh heavily on the agency as it makes its assessment.
Acadia shares surged 64 percent on Thursday after the announcement and closed at $13.10 after hitting a 52-week high of $13.92. In premarket trading on Friday, the stock slipped 20 cents to $12.90 about 90 minutes before the market opening. The share price has more than doubled since closing 2012 at $4.65.